Confirmed as operating as intended in CA case 21867815 and they asked me to submit an Enhancement Request in the CA Communities site.
SDM is version 12.7 and APM is version 12.8
When we import or manually create a location in Asset Portfolio Management (ITAM), SDM will ignore it if the "Location Type" is defined. ITAM populates the ca_location table which it and SDM share.
SDM will see the location if we do not enter a Location Type (or clear a value after it is entered). Location Type is important for asset management.
For now, we have a workaround to map Location Type to a different unused field and relabeled it in the ITAM GUI.